FAST SCHEME 2026 Eligibility, Tax Implications, Valuation & December 31 Deadline
CA Naveen Wadhwa
CA Ashish Gupta
Vice-President, Taxmann
Deputy Manager, Taxmann
FAST SCHEME 2026 Eligibility, Tax Implications, Valuation & December 31 Deadline
CA Naveen Wadhwa
CA Ashish Gupta
Vice-President, Taxmann
Deputy Manager, Taxmann
Contents 1.
Who is eligible for the FAST Scheme?
6
2.
What will the taxpayer be required to pay?
6
3.
How will the foreign asset be valued?
6
4.
Conversion of foreign currency into Indian rupees
7
5.
DemComparative Analysis
8
6.
What is the procedure for filing a declaration?
9
7.
What protection does the FAST Scheme offer?
9
Income-tax Return (ITR) Forms 2 and 3 include Schedule FA to report foreign assets, income, and beneficial ownership. Introduced to address tax evasion and money laundering, Schedule FA has been part of the ITR forms since FY 2011-12 (AY 2012-13). Under this schedule, individuals (ordinarily resident in India) must disclose their foreign assets and income, regardless of whether the income is taxable in India. Failure to provide accurate information in Schedule FA can result in a penalty of Rs 10 lakh. Additionally, the individual may face imprisonment for six months to seven years, along with fines. To provide amnesty to small taxpayers, the Budget 2026 introduced the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (‘FAST Scheme’). This scheme, which came into force on 16th August 2026, provides a one-time voluntary disclosure window. A declaration can be filed under this scheme between 16th August and 31st December 2026, and no declaration can be filed after that date. For a taxpayer with a modest foreign bank account or an unreported overseas investment, this Scheme offers a final opportunity to obtain immunity from penalty and prosecution for non-disclosure in Schedule FA in earlier years.
FAST Scheme 2026 Eligibility, Tax Implications, Valuation & December 31 Deadline
5
1. Who is eligible for the FAST Scheme? OAn ssesse is eligible to file a declaration if he is resident in India in the relevant previous year. A person who was a non-resident or resident but not ordinarily resident in the relevant previous year is also eligible, provided he was resident in India either in the previous year to which the undisclosed foreign income relates or in the previous year in which the undisclosed asset outside India was acquired. The declaration is available where the ssesse has failed to furnish a return under Section 139 of the repealed Income-tax Act, 1961, or has filed a return before the commencement of the Scheme without disclosing the asset or income. However, this scheme is not available to the following categories. • First, any income or asset that, directly or indirectly, represents proceeds of crime in respect of which proceedings have been initiated or are pending under the Prevention of Money-Laundering Act, 2002. • Second, any income or asset relating to an assessment year for which assessment proceedings under the Black Money Act, 2015, have already been concluded. • Where the aggregate value of the undisclosed asset located outside India and the undisclosed foreign income exceeds Rs. 1 crore. • Where the aggregate value of an asset outside India acquired either from income earned while the ssesse was a non-resident or from income already offered to tax but not reported in the relevant Schedule of the return exceeds Rs. 5 crore.
2. What will the taxpayer be required to pay? The small taxpayer must pay 30% tax on the value of the undisclosed asset as on 31st March 2026 and on the undisclosed foreign income, plus a penalty of 100% of the tax. There will be no surcharge or cess on the tax amount. Thus, the effective tax rate will be 60%. This option applies if the aggregate value of the undisclosed asset and income does not exceed Rs. 1 crore. However, if the small taxpayer acquired an asset outside India, either from income earned while he was a non-resident or from income already offered to tax but not reported in the relevant Schedule of the return, he will be liable to pay a flat fee of Rs. 1 lakh. This option applies if the value of such asset and income does not exceed Rs. 5 crores.
3. How will the foreign asset be valued? The same valuation date of 31st March 2026 applies to all asset classes. For most asset classes, including bullion, artistic works, immovable property, shares, securities, and other assets, the fair market value is the higher of the cost of acquisition and the price the asset would ordinarily fetch in the open market on the valuation date.
6
FAST Scheme 2026 Eligibility, Tax Implications, Valuation & December 31 Deadline
Quoted shares and securities are valued at the higher of cost and the average of the lowest and highest quoted prices on an established securities market as of the valuation date. Unquoted equity shares are valued using the book-value formula. The rule for a foreign bank account is the one that will surprise most declarants. The account’s value is not its balance on the valuation date. It is the sum of all deposits made in the account from the date of opening until the valuation date, excluding only those deposits made out of the proceeds of an earlier withdrawal from the same account. For instance, the value of a foreign bank account opened in 2010, with deposits and withdrawals on multiple dates, will be computed as follows. Date
Deposits
Withdrawals
Amount counted towards value
01-04-2010
$ 1,000
-
$ 1,000
01-06-2011
$ 500
-
$ 500
01-08-2011
-
$ 700
-
01-04-2012
$ 500
-
Nil
01-08-2013
$ 500
-
$ 300
01-04-2019
$ 2,500
-
$ 2,500
01-06-2020
-
$ 400
-
01-09-2021
$ 1,000
-
$ 600
01-05-2024
-
$ 500
-
$ 6,000
$ 1,600
$ 4,900
Total
4. Conversion of foreign currency into Indian rupees The fair market value of an asset, determined in one of the permitted currencies designated by the RBI under the FEM (Deposit) Regulations, 2016, shall be converted into Indian currency at the RBI’s reference rate on 31st March 2026. Some of these rates are as follows: • • • • •
INR 94.6543/USD INR 125.6347/GBP INR 109.0064/EUR INR 59.2500/JPY INR 25.7694/AED
FAST Scheme 2026 Eligibility, Tax Implications, Valuation & December 31 Deadline
7
5. Comparative Analysis The table below compares the two options available to a taxpayer holding an undisclosed foreign asset: declare under the FAST Scheme before 31st December 2026 or do nothing and be assessed under the Black Money Act, 2015 when the asset comes to the Assessing Officer’s notice. Particulars
Mr. A
Mr. B
Mr. C
FMV of undisclosed foreign asset as on 31st March 2026 [A]
60,00,000
40,00,000
75,00,000
Undisclosed foreign income of earlier years [B]
20,00,000
10,00,000
26,00,000
Aggregate value [C = A + B]
80,00,000
50,00,000
1,01,00,000
Yes
Yes
No
Eligible for the FAST Scheme (aggregate not exceeding Rs. 1 crore)
Option 1: Declaration under the FAST Scheme Tax on the value of the undisclosed asset [D = A x 30%]
18,00,000
12,00,000
Not available
Tax on the undisclosed foreign income [E = B x 30%]
6,00,000
3,00,000
Not available
Total tax [F = D + E]
24,00,000
15,00,000
Not available
Penalty under the Scheme [G = F x 100%]
24,00,000
15,00,000
Not available
Total amount payable under the Scheme [H = F + G]
48,00,000
30,00,000
Not available
Option 2: No declaration, and the asset is later detected under the Black Money Act, 2015 Tax under Section 3 [I = C x 30%]
24,00,000
15,00,000
30,30,000
Penalty under Section 41 [J = I x 300%]
72,00,000
45,00,000
90,90,000
Penalty under Section 42/43 [K]
10,00,000
10,00,000
10,00,000
Total amount payable [L = I + J + K]
1,06,00,000
70,00,000
1,31,20,000
Yes
Yes
Yes
60.00%
60.00%
-
132.50%
140.00%
129.90%
58,00,000
40,00,000
-
Exposure to prosecution under Section 50 Comparison Effective outgo as a percentage of the aggregate value under Option 1 [H / C] Effective outgo as a percentage of the aggregate value under Option 2 [L / C] Additional outgo if the declaration is not made [M = L - H]
Note: The computation assumes that the value of the asset detected under the Black Money Act, 2015 is the same as its value as on 31st March 2026. Surcharge, cess and interest have not been considered to simplify the illustration.
8
FAST Scheme 2026 Eligibility, Tax Implications, Valuation & December 31 Deadline
6. What is the procedure for filing a declaration? The declaration is filed electronically in Form 1, along with documents evidencing the acquisition of the asset or the earning of the income, and a valuation report wherever required. The authorities then communicate the amount payable through an order in Form 2 within one month of the end of the month in which the declaration is made. The payment must be made within two months of the end of the month in which the order is received. A further period of up to two months is available, with simple interest at 1% for every month or part of a month of delay. Payment beyond that extended period will make the taxpayer ineligible for the scheme. Once payment is made, the declarant intimates the details electronically in Form 3, accompanied by proof of payment. The authority issues a final order in Form 4 within one month of the month in which the intimation is received. That order is conclusive on the matters stated in it.
7. What protection does the FAST Scheme offer? A declarant who files a valid declaration and pays within the specified period is granted immunity from any further tax or penalty and from prosecution under the Black Money Act, 2015 in respect of the declared income or asset for the previous year ending on 31st March 2026 or any earlier previous year. The declared income and the amount invested in the declared asset are not to be included in the total income of the declarant for any assessment year under the repealed Income-tax Act, 1961 or under the Black Money Act, 2015. Where assessment proceedings under either enactment are pending in respect of the same income or asset, the Assessing Officer is required to take the declaration into account while finalising the assessment.
FAST Scheme 2026 Eligibility, Tax Implications, Valuation & December 31 Deadline
9
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